The Reserve Bank of India (RBI) has extended the directives issued to Lucknow-based National Mercantile Co-operative Bank until September 10, 2024, subject to review.
Under these directives, initially announced on March 9, 2023, and later extended to June 10, 2024, the bank is prohibited from granting or renewing any loans and advances, making investments, incurring liabilities, including borrowing and accepting fresh deposits, disbursing payments, entering into any compromise or arrangement, and selling or disposing of any of its properties or assets without prior approval from the RBI.
However, the RBI has allowed depositors to withdraw a sum not exceeding ₹30,000 from their total balance across all savings banks, current accounts, or any other account, subject to specified conditions.
Eligible depositors are entitled to receive a deposit insurance claim amount of up to ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation. This entitlement is granted under the provisions of Section 18A of the DICGC Act (amendment) 2021, contingent upon the submission of willingness by the concerned depositors.
The RBI highlighted that the issuance of these directives should not be interpreted as a cancellation of the banking license.
The National Mercantile Co-operative Bank will continue to conduct banking business under these restrictions until its financial position improves. The RBI reserves the right to consider modifications to these directives.
Also Read: RBI closely monitoring data to see if further measures are necessary on unsecured lending
Under these directives, initially announced on March 9, 2023, and later extended to June 10, 2024, the bank is prohibited from granting or renewing any loans and advances, making investments, incurring liabilities, including borrowing and accepting fresh deposits, disbursing payments, entering into any compromise or arrangement, and selling or disposing of any of its properties or assets without prior approval from the RBI.
However, the RBI has allowed depositors to withdraw a sum not exceeding ₹30,000 from their total balance across all savings banks, current accounts, or any other account, subject to specified conditions.
Eligible depositors are entitled to receive a deposit insurance claim amount of up to ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation. This entitlement is granted under the provisions of Section 18A of the DICGC Act (amendment) 2021, contingent upon the submission of willingness by the concerned depositors.
The RBI highlighted that the issuance of these directives should not be interpreted as a cancellation of the banking license.
The National Mercantile Co-operative Bank will continue to conduct banking business under these restrictions until its financial position improves. The RBI reserves the right to consider modifications to these directives.
Also Read: RBI closely monitoring data to see if further measures are necessary on unsecured lending
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